Women and insurance discrimination

Insurance equality: A new era of equal treatment for Women.

Women's right to access insurance products

South Africa's progressive legal system has made way for women to compete with their male counterparts in various sectors of the economy. Some of the contributory factors to the financial liberation of women include access to education and exposure to high-ranking positions. It is owing to this that South Africa ranks moderately to well in international studies pertaining to gender equity. In spite of this, there is still progress to be made in certain parts of our society. A discussion on gender disparity in the insurance market is a less travelled journey, which deserves exploration. A look at the case of Brink v Kitshoff NO and subsequent legal developments will inform us of the advancements made in the insurance industry since the time when women were restricted from having full access to the market.

Gendered insurance gap

For a long time, gender disparities in the insurance industry were perpetuated to the detriment of women. With the advent of a constitutional democracy that ushered in the Interim Constitution, the effects of unjustified discrimination in insurance based on gender or any other recognised ground were mitigated, although not entirely eradicated.

In the matter of Brink v Kitshoff NO, a husband had taken out a life policy in 1989 and ceded it to his wife in 1990. The husband passed away on 9 April 1994 before the commencement of the Interim Constitution. The executor of the deceased estate advised his creditors that the estate was insolvent and requested the insurer to pay the proceeds of the policy to make up for the debts in the estate. This scenario was covered under section 44 of the Insurance Act 27 of 1943 (“Old Insurance Act”), however, it did not allow for equal treatment between men and women.

In terms of section 44 of the Old Insurance Act, where a life policy had been ceded to a woman by her husband more than two years before the sequestration of her husband's estate:

>     she could only receive the maximum amount of R30 000 from the policy; and

>     the creditors of the husband's estate could attach the balance of the policy.

However, the wife would not receive any benefit from the policy if less than two years had elapsed from the date of sequestration of her husband's estate or from the date the policy was ceded to her. This means that even though the life policy was ceded to the wife, she will not get any benefit and the full proceeds of the policy would be deemed to form part of the husband's estate.

In Brink v Kitshoff NO, the insurer did not want to pay the proceeds to the deceased estate and the executor applied in court for an order to force the insurer to make payment. The deceased's wife challenged the constitutional validity of section 44 on the ground that its provisions constituted an infringement of right to equality and the right not to be unfairly discriminated against.

Section 44 of the old Insurance Act drew a distinction between married men and married women as similar provisions did not apply to the husband. The Constitutional Court held that one of the purposes of section 44 was to protect the interests of creditors. The constitutional rights of married women did not have to be infringed to protect the interests of creditors as other legislative provisions could serve this purpose. The Constitutional Court held that the provisions of section 44 of the Old Insurance Act was inconsistent with the Interim Constitution and had to be declared invalid.

New legal developments

Brink v Kitshoff NO, various pieces of legislation were enacted to transform the insurance industry and bring it in line with the Constitution. In particular, the Insurance Act 18 of 2017 (“New Insurance Act”) is aimed at promoting a broad-based transformation of the insurance sector by broadening access to insurance for everyone.

In terms of the New Insurance Act, which is aligned to section 9 of the Constitution (the equality clause), no person may be unfairly discriminated against on the basis of their marital status, sex, gender or any other ground when ceding an insurance policy to another. Today, everyone may cede a life policy to anyone in the form of an out-and-out cession or a security cession.

In an out-and-out cession, the cedent transfers its rights against its debtor to a cessionary, making the cessionary the new owner and holder of the rights stemming from the policy. The insurer would have to pay the proceeds of the policy over to the cessionary once the cession is complete and on surrender or maturity of the policy. A security cession refers to a situation where the cedent pledges its rights against its debtor and transfers the rights to the cessionary for the fulfilment by the cedent of its obligation towards the cessionary. An example of a security cession is one where a party transfers its right to the proceeds of a life policy to a bank to secure a loan.

Conclusion

The current legal framework in the insurance sector has assisted in making headway for the inclusion of women in the market. The Constitutional Court's findings in Brink v Kitshoff NO shaped the way in which the value of women's participation in the financial sector and as part of the labour force would later be viewed and enforced. Nevertheless, worthy of note is the fact that official statistics demonstrate that there remains a disparity in the income earning potential of women in comparison to men despite the fact that more women may be attending higher learning institutions and obtaining formal qualifications. This is according to local and international studies. Acknowledging the gaps there are in the market and monitoring the legislative redress processes will continue to serve as critical tools in furthering the recognition and protection of women's rights.

Did you know…No person may be unfairly discriminated against on the basis of their marital status, sex, gender or any other ground when ceding an insurance policy to another.